Several hours into the hearing Senator Doug Cameron clashed with Joyce saying he was “trying to get an idea of the thinking behind this crazy idea of Qantas to ground the airline . You’re like Richard Nixon trying to talk your way out of everything.”

Joyce responded “You’re a bit like a McCarthy trial at the moment …”

The senators were unaware of the drama going on aboard QF31, a Qantas A380 flying from Singapore to London, which has made an emergency landing in Dubai after an engine failure.

The incident comes on the first anniversary of the incident in which the A380 operating QF32 suffered a catastrophic engine failure after departing Singapore for Sydney. It is still on the ground at Singapore airport undergoing a massive reconstruction.

Joyce may have been handed an alert about the incident just before his extended appearance before the Senate inquiry ended. It was hard to discern on the live streaming broadcast of proceedings.

In the session Cameron accused Joyce of deliberately destroying the Australian economy to try and get his way, and Joyce responded very clearly that the actions he took entirely on his own using his operational discretion were absolutely essential to save Qantas from a death by a thousand cuts and that he was justified in enlarging the dispute by shutting down the airline to force a show down in Fair Work Australia leading to the shutting down of lawful industrial action by its pilots, licensed engineers and ground staff.

The chairman of the Senate Committee Senator Glenn Serle said there were a huge number of questions arising from Joyce’s testimony and Cameron said he was going to study the Hansard very carefully to frame those that would be pursued when a return session with the Qantas CEO was scheduled.

During the session Senator Brown accessed Joyce of deliberately misleading parliamentarians in the weeks before the grounding as to its premeditated plan to lock out staff and passengers.

In the opening stages of today’s inquiry into Still Call Australia Home amendments to the Qantas Sale Act of 1992 Joyce said the Qantas group would have to be split up and Jetstar and its Asia interests sold if the legislation is amended as proposed. However he told the chairman, Senator Glenn Sterle, that Qantas is not considering or planning to break up the airline group and sell off some assets and it has not been discussed at board level.

The amendments would stop Qantas using subsidiary investments to transfer assets offshore to some extent, and would outlaw the rotation of Asia based flight crews through domestic services.

Grilled by Serle about the illegality of Qantas continuing to sell tickets after it had decided to ground the fleet, Joyce briefly laughed and said it was a mistake but was pulled up by Serle who said “it was not a little mistake”.

Serle expressed incredulity that Qantas did not discover its mistake in continuing to illegally sell tickets after its decision to ground the fleet until 8.30pm, three-and-a-half hours after the grounding that left it with no real product to sell (contrary to law).

Joyce also insisted that Qantas did not book any more rooms than usual in hotels around the world in the four days before the snap grounding decision than normal, and disputed that letters to 30,000 Qantas staff concerning the shutdown had been printed or couriers booked, days in advance.

He then said the formal notifications after the 10.30am board endorsement of his grounding decision last Saturday were not printed until 11.30am for distribution not before 5pm and that the couriers were not booked until well after the shut down.

Serle asked if it was normal for Qantas to book several thousand hotel rooms in advance for a Saturday night in Singapore or Los Angeles, and Joyce indicated that it was. He undertook to provide written proof as to when the Qantas hotel rooms were booked in both ports, when the notifications were printed and when the couriers were engaged.

Serle told Joyce he had the most honest face at the table, but he had to satisfy other senators.

In answer to questions from Xenophon, Joyce confirmed he made the grounding decision alone using his unlimited delegated authority in operational matters. He had referred it to the board because of its implications for the brand and for their endorsement.

Joyce told the inquiry that Qantas might not have survived a year because of the rate at which forward bookings were collapsing. He said that in October actual sales of higher yielding business fares were down by 40% on the prime east coast route, off by 14% on Perth routes and down by 7% on Canberra routes.

In a late development the committee will go in camera shortly to see emails to Qantas employees confirming that management had planned the grounding more than a week before Joyce claims to have woken up and taken a spontaneous decision.

57 thoughts on “Alan Joyce faces fire in Senate grilling”

Just wait to read the RupertFurher’s ranters on this one. They probably made up their stories before the Irish joke said a word. “The heroic and poorly paid CEO put those gaggle of greens and recycled union hacks in their place with his forceful and factual answers to their weak questioning, saying his passengers had to suffer so he could defeat those terrible awful mean unions.”
I gather Rupert has –thankfully briefly–returned to hand out awards. I’m betting THE TELLY will win this year’s best made up “news” story with no problems

Did you see that I am now a serious player in this game:
“Chief executive and founder Michael James said the firm’s name (Air Australia) would draw more attention to the fact the airline was 100 per cent Australian owned and operated.”

Nah, not me. Nor, I imagine, the other Crikey commenter MJ. Too many bloody MJs around. Still I wouldn’t mind if the aviator MJ accidentally contributed his super to my account. Alas it is always the other way around. For about 3 years in the UK my contributions were made to the ‘wrong’ Michael James! Even in Paris I couldn’t escape; the authorities (can’t remember if it was tax business) were after another former-resident MJ. And this aviator MJ also lives in Brisbane.

Having watched over two and a half hours of the Senate Committee questioning J0yce, we have just witnessed a moment of monumental irony. When the Committee Chair asked if he could extend his time for more questions J0yce responded, without a hint of humour, that he had a plane to catch!

In fact. he did extend the time but only after conferring with his now over-exposed PR underling, Olivia Wirth. On a couple occasions later in the session he looked to her for a nod of approval that he could continue the session.

One would assume that a man who is so all-powerful that he can ground an airline with two hours’ notice can also re-arrange his pre-booked flight and diary at the last minute – particularly with the perfect and water-tight excuse ‘sorry, I’m delayed at a Senate Committee hearing.’

The word ironic does not adequately describe J0yce’s concern that he may not catch his Qantas flight and have his plans inconvenienced.

Ben,
Qantas’ Queeg and the Peter Principle: the cost of flawed CEO recruitment
Irrespective of the rights and wrongs of Qantas CEO, Alan Joyce’s decision to ground the airline’s aircraft, the question has to be asked: how did the situation get to that point? Are the unions really the problem as Joyce asserts or has his own leadership style produced a counter-dependent response…….a modern day, Captain Queeg-like “Caine mutiny”, that suddenly requires intervention by a higher authority (if we believe Julia Gillard and Tony Abbott)?
A strong argument can be made that the board of Qantas is responsible for the state of the airline today. Alan Joyce was appointed to the role of CEO of Qantas less than 5 months after his 42nd birthday. Many executive recruitment experts would advise that at 42 (when he was appointed to the Qantas CEO role, Alan Joyce just could not have had enough experience of strategic management to do the job well. Some methodologies would suggest he would need to be at leas 50 before he could be expected to make effective decisions for an organisation as large and complex as Qantas. In fact, it could be argued that Alan Joyce’s Queeg- like behaviour (see Herman Wouk’s “The Caine Mutiny”) is a predictable outcome of putting someone in a job requiring decisionmaking above their capability level.
In terms more familiar to most people, Alan Joyce is a perfect illustration of the Peter Principle: he has been promoted to his level of incompetence.
It could be argued that the Qantas board should have taken more notice of Alan Joyce’s previous work performance. Joyce was in charge of Revenue Management and Fleet Planning at Ansett until the year before Ansett went into receivership. Certainly the warning signs about Joyce’s leadership have been clearly visible since he took the job. For a while Joyce could be forgiven for many of the problems he face because he was required to respond to the consequences of decisions that (it could be argued) were made before he was CEO. These decisions have required Joyce to respond to a range of issues that have included customer service, aircraft maintenance, aircraft selection, industrial relations, international relations & fuel price hedging . Crikey’s own contributor Ben Sandilands has documented many of them on his Crikey blog “Plane Talking”.
It may also be that Alan Joyce will never attain the judgement making ability required to lead a 35,000 staff multinational operation organisation. It could be argued that the very fact that Alan Joyce finds enough time to read your “Plane Talking” Crikey blogs and write letters denying Sandiland’s assertions (see: http://blogs.crikey.com.au/planetalking/2011/06/09/letter-from-qantas-ceo-alan-joyce/) is evidence that Alan Joyce might be a classic “Narcissistic Leader”*….more concerned about his own image in the Crikey “mirror” than the health of Qantas. (*see Wikipedia’s definition of corporate narcissism @ http://en.wikipedia.org/wiki/Narcissistic_leadership as well as Sam Vaknin’s somewhat darker definition @ http://www.globalpolitician.com/print.asp?id=558).
[A couple of extracts from Sam Vaknin’s essay:
“The malignant narcissist invents and then projects a false, fictitious, self for the world to fear, or to admire. He maintains a tenuous grasp on reality to start with and this is further exacerbated by the trappings of power. The narcissist’s grandiose self-delusions and fantasies of omnipotence and omniscience are supported by real life authority and the narcissist’s predilection to surround himself with obsequious sycophants.”
“
Narcissistic leadership often poses as a rebellion against the “old ways” – against the hegemonic culture, the upper classes, the established religions, the superpowers, the corrupt order. Narcissistic movements are puerile, a reaction to narcissistic injuries inflicted upon a narcissistic (and rather psychopathic) toddler nation-state, or group, or upon the leader.”]
Those who support and admire Alan Joyce’s bold grounding of aircraft while CHOGM was being held and on the weekend of the Melbourne Cup might see Joyce’s timing as excellent. Those that view him as a dysfunctional narcissist would recognise that the bigger the audience and the more dramatic the “stage”, the more he probably enjoyed it. The damage to Qantas is a price he is happy to pay for his fame. Seeking fame is also a hallmark of the narcissistic leader. How many previous Qantas CEO’s can the average Australian name? Most would be hard pressed to name even one.
To even begin to resolve its problems the board of Qantas has to replace Alan Joyce as soon as possible, with a successor with extensive large multinational experience in helping a “stalled” organisation to recover “flying speed”. It will need someone like Jac Nasser. [A case study for Qantas to compare itself to might be Telstra’s experience with Sol Trujillo or Labor’s experience with Kevin Rudd.]

When the Qantas board has found Joyce’s successor they will also need to realise that many of the problems the new CEO will face in the next 10 years will have resulted from decisions made under Joyce’s watch. Ultimately, Qantas shareholders should hold the Qantas board accountable for its decision to recruit Alan Joyce in the first place.

How can Joyce hope to win the hearts and minds of Qantas pilots and engineers at this point? If a Qantas employee sabotages a Qantas jet and causes an accident whose fault would it be? Where was Joyce’s concern for all of the passengers and businesses that were mere “collateral damage” to the great Qantas general with the grand plan and sense of drama?

The Senate is right to grill Joyce….and Qantas shareholders will be right when they change the sycophantic Qantas board.

What a joke! Qantas is already a foreign entity with a kangaroo face as are most of our companies. See who the CEO’s of these shows are now. -all foreigners whose mothers aren’t going to belt them for selling out their country. Our guys are over in their countries doing the same thing. Truth is most Australian jobs are going the way of the beleagued USA – offshore. The multinationals have decided to a one, to obtain the human inputs the lowest cost providers – you know the states where slavery is still legal, and they won’t return until we are earning comparable wages. If they could export mining to China they’d be doing that as well but the Chinese are keeping their minerals in the ground (exept for gold), and buying ours. By the way they have reserves of most minerals which are larger than ours so why not exhaust ours first in return for fiat printed ticket money and twhen we are all cratered and fracked out with a surface resembling the moon, they will start digging up their stuff. If we are dumb enough to destroy our country for mining royalties then they are happy to oblige. Our soveriegnty is being sold to the highest bidder by our scumbag politicans. Is there an honest man in the house? Not in Greece where Papandreou has been pulled back into line by the internatonal bankers through their puppets in the Greek parliament.
The Greeks need to call in the Spartans to help take back their country. We are five years behind.

BOHEMIAN
Well said, if only people could clear their heads from the fog that they seem submerged in.
How can the Greek capitulation to the demands of foreign bankers be justified?
I note with major irony that the Greeks are being forced into the sale of their publicly owned assets.
Just a moments thought on this and it can be concluded that “Buyers borrow credit to appropriate “the commons” in the same way they bid for commercial real estate. The winner is whoever raises the largest buyout loan – by pledging the most revenue to pay the bank as interest. So the financial sector ends up with the revenue hitherto paid to governments as taxes or user fees. This is euphemized as a free market.”
This is an insane way for governments to treat their own people.
This is what has happened to Qantas and to our water supplies and to our power companies and telecommunications companies and any who support such maneuvers should be charged with treason but the people didn’t notice because they were too interested in they were watching funniest home videos or masterchef or some such brain rot instead of investing the mental energy to process what whats happening to their own futures.
They they moan its the governments fault for not penalising the workers. Such stupidity we really do deserve the disasters that peak oil and climate change are about to visit upon humanity.

The credibilty, character and credulity of Joyce were up for examination today – and in my opnion he did not show well. Seems to me he is a man in the mould of M’Cay. I would not follow him into battle. He is of the, do as I say and not as I do, type of ‘leader’.
But really, in this premeditated affair, it is not just Joyce, with all of his obvious flaws,
shortcomings and weaknesses, it is also about the Board.
Joyce is a loquacious little man, prepared to use his guile to please. He is also an ambitious little man with a strong sense of whatever it takes.

Joyce seems to assume that forward bookings were falling purely because of the threat of industrial action, and not because customers were getting fed up with the management of the airline. On that logic, doing anything you can to shut down the strikes makes sense (although perhaps there were more sensible ways to resolve it), but I’m quite sure that some percentage of the fall in bookings is due to customers feeling as though Qantas wasn’t an airline they wanted to do business with, and on that logic the shutdown was a ridiculous idea.

I guess time will tell whether customers start flocking back to Qantas, or whether they’ll take even more steps away from the airline now that they’ve been placed as pawns in the struggle between management and workers.

Ah “Geewizz”, you’re so right!
But what is a “shareholder”? It is very complex. A “shareholder” certainly isn’t just one of those angry people, who didn’t want to see Joyce get a 71% pay increase, or who were dismayed at the decline in Qantas under his management prior to any strike action. There are huge blocks of votes that render the ordinary shareholder utterly powerless in any decision making. It’s all done behind closed doors. (Maybe the “Occupy” supporters make some points worth considering.)
“Tim Vernum” is quite right about that. Qantas decline is not as simple as combatting industrial action. It began long before the action. Qantas used to be 100% reliable, 100% safe and 100% Australian. But when you have to struggle to understand its CEO, who wants to move everything off shore and to fight against employing Australians, what’s left? May just as well fly Cathay Pacific! So we did. When Qantas wants to return to being an Australian airline it will give us a point of difference worth considering. Until then we’ll boycott it.

In a late development the committee will go in camera shortly to see emails to Qantas employees confirming that management had planned the grounding more than a week before Joyce claims to have woken up and taken a spontaneous decision.

I consider Joyce to be a lying leprechaun, but surely he wouldn’t be so utterly stupid as to hold the “spontaneous decision” line while knowing about such emails? I guess that remains to be seen.

In a late development the committee will go in camera shortly to see emails to Qantas employees confirming that management had planned the grounding more than a week before Joyce claims to have woken up and taken a spontaneous decision.

I consider Joyce to be a lying leprechaun, but surely he wouldn’t be so utterly stupid as to hold the “spontaneous decision” line while knowing about such emails? I guess that remains to be seen.

Following the “spontaneous decision” I find it nothing short of a miracle that every Qantas Board member was available by phone on Saturday morning. J0yce claims it was a unanimous vote for the grounding and lockout – which means not a single Board member had their phone turned off or was scuba diving, abseiling etc at the eleventh hour.

Unless, of course, they had been pre-warned to be on standby for something important on Saturday morning. But that doesn’t fit with spontaneity, does it?

It amazes me that these geniuses that are paid in the millions always revert to cutting costs, no matter what the industry or business is. Anyone ever think of increasing income or is that just too hard? What would the true “Qantas” situation if Jetstar had not taken over the flights that it has? Anyone done that exercise to apportion Jetstars market share to its parent? Just a thought.

Read Stephen Fry’s Twitter page – he does not question Qantas safety, indeed he praises Qantas staff for their service in getting his wallet and credit cards, which he had left on the plane, back to him.

Why is everyone complaining about a private company and it’s business goings ons?

If you don’t like it… start your own airline.

Besides if Virgin or Tiger shafted their employees(which they already do) you wouldn’t be hearing about it on the news. It seems everyone thinks Qantas is “ours”, but if you aren’t a shareholder it’s not.

Geewiz – “This is not a communist country… well not just yet anyway. The board of the company are the only ones who can sack him.”
Not true by a long shot I’m afraid and you don’t have to be a dictatorship (hard right) or communist country (hard left) to enable it.
History shows clearly a company/organisation or asset is there for the taking – anytime enough people say “thats it we’ve had enough of these greedy sods”.
They used to incorporate methods such as guillotines to ensure no come back, but we’re much more civilised these days.
A government supported by the people would simply say, off you go boys, we’re buying it back, this is what you get, close the door behind you!
But seriously – on Joyce, there is always a gig for CEO’s willing to union bash . . . but those gigs usually don’t last because few leaders survive long without the trust and confidence of their people.
Joyce is a career builder, not a leader.

It seems everyone thinks Qantas is “ours”, but if you aren’t a shareholder it’s not.

That may be Geewizz, but Qantas trades on the sentiment about being so Australian, note the childrens choir and the sweeping Australian landscapes. But the clincher is the Peter Allen song…….what was it called? Oh thats right, I Still Call Australia Home.
Can’t have it both ways.

[“History shows clearly a company/organisation or asset is there for the taking – anytime enough people say “thats it we’ve had enough of these greedy sods”.”]

Ahhh you so are waiting for a socialist uprising of the sort in Cuba?

Private Companies are private companies. The government is the government.

If the government starts trying to forcible takeover companies without shareholder and board members approval then we have entered socialism and every business in Australia is at risk of a forced takeover. Our economy would collapse overnight.

No one can sack Alan Joyce except the Board. The board are voted in by shareholders, not the government.

Once again there is an option for this government, the unions and it’s hackeries… Start your OWN airline. See how easy it is. Pay union level wages and let us know how it works out when it’s your own money on the table.

An amusing aspect of the Qantas debate is this rose-coloured view of the masses that somehow the ‘old’ Qantas was a better airline. Hands in the taxpayer pocket, year after year, worse service and a public-service mentality are hardly traits worth rebuilding. The irony is these same masses buy the cheapest fare they can find, regardless of the carrier or its treatment of its staff (SQ, Emirates, Etihad I’m looking at you).
@Alison and other Aussie oi-oi-oi nationalists who continually (and disparagingly) refer to his Irish or non-Aussie background: you can hardly cancel Joyce’s visa: he’s Australian. Bernard Keane’s recent use of the word ‘terrorist’ was another low point in these distasteful references to the man.
@Archer: your view on Qantas marketing is about 10 years out of date – Peter Allen and that ‘still call Australia home’ song, kids singing etc. is no longer part of Qantas’s marketing.

To those upset at the loss of whatever Qantas used to be (another broke, nationalised airline that would have disappeared like the rest of them), why not agitate to get the international business re-nationalised? I’m sure Qantas would be happy to hand it over the to taxpayer, along with its absurdly high cost structure, management-by-unions and government-run service levels.

Some good points, however you forgot one that these socialists keep repeating and that is “takeover Qantas”.

Qantas started off as a private company and was so until 1947, when the Chiefly government bought the company. Key word there: BOUGHT.

The company was then sold off again in 1992. I love how the government loves making money from a company sell off and then after they get the money want to tell them how to run the company.

Anyways back to the socialists in here. So Qantas was purchased in 1947 by the government. The government could “nationalise” it again but they won’t, because it would cost them Billions. And if they did buy the company again, what would they do with it? Let the Union heavies go to town with wages and conditions sending airfare prices sky rocketing?

How many on the left here actually fly Qantas by the way and pay the premium cost over airlines which shaft their employees more such as Virgin Blue, Tiger and Jetstar(yes part of Qantas but different pay structure)?

Of course you don’t. You go for the cheapest flight and couldn’t give 2 stuffs about “union rights” when it comes to your hip pocket. Hypocrits.

Sadly for your right wing “socialist cant” the Unions are fighting for wages and conditions for Australian workers to not be those of the socialist countries of China and Vietnam.

This is the real question. Should people of Australia have the slave wages and awful working conditions of those socialist dictatorships. Or should those workers have the democratic right to protest to protect wages and conditions expected of a developed world democracy?

Alan Joyce and the Qantas board are doing their damnedest to turn Australian workers wages and conditions into socialist wage slave ones.

If the standard of questioning from our government members was an indication of their ability to draft a new QANTAS sale act, I see why we have the stupid Fair Work Act. The TWU rep was unable to state his case at all. If he wants to be the next ACTU boss this country is going down the same path we were in 20 years ago.

BenS – Can you clarify if there is some conflict between the IATA closed shop of yore and the current “open(ed) skies” policy. In the IATA era we had several Eurolines (SAS,KLM,LuftH etc) but now it is BA,UA and ..errrr… that’s it from the olde worlde, the slack taken up by the nationalised, low wage carriers.
I’m wondering how long before some innovative genius comes up with the idea of a cheapish, low cost cruise ship to Singapore or Colombo (the Soviet CTC ship/fly was a winner in the 60s – a week of sex, food & booze then decanted onto the flight to London in Singapore – half the price of the SYD-LHR ticket).
Hell, I’d happily take six weeks to Southampton, with stops along the west coast of Africa & Iberia.

@ Gee Wizz – the reason why people are in a lather about what Joyce is doing, fundamentally comes down to the fact that Qantas was once a public asset and sold under the Qantas Sale Act, which prescribes that the majority of jobs and operations (read also maintenance) stays in Australia. Joyce has been actively circumventing that by offshoring maintenance and using its subsidiaries to transfer Qantas assets, as we now know.

Ever since the Qantas privatisation, we have had appalling leadership at the helm of Qantas, which has overseen a failure of strategic investment in aircraft (old , fuel inefficiant aircraft), systemic failure in maintenance operations due to offshoring (pay peanuts, you get monkeys), and staff management, which is the last thing that Qantas has actually got going for it (by using experienced Australian pilots and cabin crew at the moment). Its terrible – we will no longer have a national airline carrier but a cheap, nasty, low rent Asian operation which will still seek to tug at the sentimental heart strings of Aussies by implying its still an Aussie airline carrier.

Frankly, the Feds should step in and nationalise the international operation and restore it to a properly run, full service aircraft. There is a strategic interest in this – the economy of Australia and its reputation.

@ SB – can’t blame the pollies for being furious; what Joyce did was absolutely outrageous.

@ Gee Wizz – I’m not wrong – read my sentence carefully – Qantas belonged to the government once and then was sold under the Qantas Sale Act. I’m sure you would agree that is what I said, on reflection.

As for Labor’s so-called legacy of debt, that’s bull shit (I am sick of that lie) – this was a stupid claim based on forward estimates that were never realised because by the time Keating left office, Australia was already strongly pulling out of recession – and Howard took the benefit of it. And as for Costello, he just lay in a hammock for the next 11 years (Keatings words) thanks to the powerful economic reforms introduced by Keating.

Howard’s reasons for selling Qantas were ideological, pure and simple.

As for the unions, this is precisely what the fight is about – quality, appropriate wages (worker are already prepared to accept only 2.5% wage increase, which is effectively a wage cut, given the inflation rate), but more importantly job security. The airline has been run into the ground simply because Joyce wants to set up a low cost, nasty little Asian carrier in Singapore or KL that keeps breaking down, and cynically market it back to us as an Australian brand. Apart from anything else, that man shouldn’t lie to us.

Borghetti at least treats the unions, his staff and the travelling public appropriately. With Virgin, you don’t get constant break downs, you don’t get cancellations at the last minute, which was my experience with Jet Star in 2009 (never again). And after being stranded on QF 5 flying to Singapore to Sydney in late August, I will never fly with that hopeless airline again. As much as I want to support the unions in this.

Not complete exaggeration. It is you on the right continually with the argument we have to compete.
Then spit the dummy when unions use their legal right to protest at Managers like Alan Joyce saying it must be cost cutting in the wages and conditions area.

This is not China or Vietnam. As Hard asJoyce was finding it he is in a democracy not a dictatorship.
His attempts to dictate terms are the problem. We saw with crystal clarity due to the stranding of innocent passengers that Joyce is a “rogue” employer.

Why do the deficits of Greece and others have anything to do with us? There is nothing in the law or constitution of this country that gives any government to hoard a surplus without supplying services.

[No it was a private company…. It never started off as a public company.]

Like most early airline services, Qantas was largely dependent on government contracts for survival, mostly for postal delivery but also Flying Doctor Service. United Airlines (started by Boeing Aircraft Co.) began the same way, and their delivery service also eventually became a stand-alone company, UPS (not to be confused with US Postal Service).

The first sale of shares in the privatization of Qantas happened in 1993 with the sale of a 25% tranche to British Airways. Then there was a long pause with further tranches in subsequent years. The final tranches were in fact sold by the Howard government resulting in 45% foreign ownership but luckily retaining the requirement of “51% Australian owned”.

And if 50 years of government ownership doesn’t mean something then I don’t know what does. It was built up during the post-war period to be one of the world’s great and innovative airlines. I have never seen any evidence that, other than the initial purchase, it ever cost the government anything. And it certainly was a great flag bearer for the nation and tourism and diplomacy for those 50 years. I suspect it repaid the purchase price one hundred fold, either directly or indirectly via all the economic and immeasurable goodwill it generated around the world. But note, it may have been government owned but it was run at arms length with operational independence, just like Singapore Airlines is run today even though the Singapore government owns a Golden Share, which you can be damned sure they will never be so short-sighted to sell off, or lose control–even though just the existence of the Golden Share may be enough to make sure untoward commercial nuttiness does not happen. Alas, no such safeguard for us.

[@DRSMITHY Posted Saturday, 5 November 2011 at 6:42 pm | Permalink
That’s because rebuilding society after the carnage wrought by a Liberal Government is an expensive business.]

I usually think of it as 12 years of nearly complete neglect of infrastructure. This is what happens when you leave it to the market! Or even worse PPPs that manage to transfer most risk to the public, all profit to private interests and use the most expensive method to fund/build infrastructure. And extraordinarily selective kinds of infrastructure such as expensive roads but neglected public transport and neglected freight transport in this, one of the largest countries in the world. Hence no solution to the city congestion problem (congestion costs estimated to be $20 to $30 billion pa soon, of course of no concern to the companies that build roads.).

There is obviously a limit to what a government can do in one term. If we get a Tony Abbott government one wonders how many years/decades it will set us back?

Marilyn is right, especially if government borrowings are used on infrastructure or other kinds of nation building (ie. not for consumption). This is because governments, especially ones with top reputations like Australia, borrow at interest rates at least half of what commercial organizations can. It can certainly be argued that allowing capital-intensive basic public infrastructure (bridges, roads, public transport, basic utilities, educational & health infrastructure etc) to be built by/funded by commercial interests is a grotesque error if not criminal. (Note for those feeble minded: obviously all infrastructure is actually physically constructed by the private sector. Here we are talking about its financing, and to a large degree its planning/specification. This is the way it is done in some of the leading “free market” capitalist countries like the USA, HK, Singapore etc.)

“I have never seen any evidence that, other than the initial purchase, it ever cost the government anything.”
Qantas was on the public teat while government owned for years. Cap in hand, each year, they’d get another walloping subsidy. The fact it still exists at all is due to it’s post-privatisation good financial management. You might not like the result, but at least it’s not dipping into your pocket.
@Tom Cook and Marilyn Shepherd: if this is the level of debate about Qantas, I don’t think they’ve got too many problems.

@PETEYBOY Posted Sunday, 6 November 2011 at 12:36 am | Permalink
“Qantas was on the public teat while government owned for years. Cap in hand, each year, they’d get another walloping subsidy. ”

What can be asserted without evidence can be dismissed without evidence. Show some convincing evidence or shut up.

“The fact it still exists at all is due to it’s post-privatisation good financial management.”

That would explain why its share price is $1.61 today compared to >$5 in the 2000s. Blame management failure on the unions. Ben S. and all informed airline-industry commentators have written reams on this, but no Peteyboy’s assertions must be true.
………………………………
@Fran B. I hope you have sent an email to Crikey about those posts?

Dixon was no better, he use to have a coffee in a cafe nearly, where a Qantas steward was working to get extra cash. Dixon knew him and called him a ‘bun chucker’, which is the term he used to describe flight crew!!

Please don’t bait or try to reason with Tom Cook. He’s all big and strong behind the computer, but I’m sure there’s someone troubled with his own sexuality behind the profile.

@Michael R James:

What can be asserted without evidence can be dismissed without evidence. Show some convincing evidence or shut up.

Rather than waste my time convincing you to shutup (charming manners), read the following:
– In 1983 after suffering large operating losses, the government chipped in $50m
– In 1992, the government gave Australian Airlines to Qantas at a heavily subsidised price of $400m.
– In 1993, the government ie. taxpayers chipped in a further $1.36 billion (yep billion) cash injection to prepare it for sale.

The airline’s parlous financial state after all this taxpayer largesse was evident when it announced a loss of $275m in 1994. It had been running regular losses in most of the preceding years, and was utterly incapable of recapitalising without government assistance.

Post-privatisation, the airline has almost consistently run at a profit, albeit with insufficient returns to justify its capital.

Amateurish sentamentalism about what how great Qantas ‘used to be’ is ill-informed – Qantas was on a highway to extinction when in government hands, and you can guarantee no government is going back there.

The problem for Alan Joyce and those on the right that want a return to WorkChoices style industrial law is that workers have rights. These are human rights. They cannot be overridden with legislation without destroying the fabric of what is our democracy. This is why WorkChoices failed. There are far more workers than there are employers. No employer is going to be able to dictate terms. Employers must learn to negotiate and respect their own workforce.
We are not China or Iran or the old USSR without rights for workers. Solidarity showed how important workers rights are. Fighting for those rights started the fight for freedom in that USSR.
Employers and organisations like the HR Nichols society are going to have to learn this lesson.
The US is also in a mess of trouble because they have been trampling workers rights for decades.

Perhaps I should have avoided the rebuke, but on the other hand it has (finally) produced some evidence from you.

But I remain unconvinced. You may not believe it but you are in fact cherry picking the data and it really proves nothing. No, I am not being obtuse or in denial. I always knew there was a high likelihood that Qantas had received government funds at different times. Of course. I don’t even know how an organization like that financed purchase of expensive aircraft etc. (Governments are liable to undercapitalize such organizations and/or place strict limits on their borrowing from commercial sources etc. Yes, to pre-empt you, a reason to privatize it but while retaining a Golden Share so as to control the things really important to the national interest. More below.)

So the thing is, you would need to do a proper accounting over the lifetime of government ownership. For example you talk about the cash injections but then ignore the cash return from the privatization (over a period of about 5 years).

On the other side of the ledger is the fact that Qantas served this country very well, probably in a way which is impossible to monetize; and yes, obviously one reason why nations retain government owned airlines. If you do not accept Singapore as a good example what would you accept? Do you think the accounts for SIA would be positive or negative over its 40+ year history? And more importantly, within limits, do you think the Singapore government puts that at the top of its list of priorities? Do you think the Singapore people would? (And if it is valid for tiny little Singapore, a brand new nation in 1964, to carefully nurture its airline, how could it not be for Australia –being at the end of the line, with routes to nowhere else, and the most distant country in the world from anywhere else?

But you also need to compare government ownership with private ownership. Qantas shares have dropped from a high of $5 (actually it briefly hit $6) to the price most of this year–let’s use $1.61–which is a drop of $3.39. With 2.265 b shares that is $7.7 billion of shareholders cash it has burned, 51% of which is Australian (mostly institutional so, no, I do not greatly distinguish between public v private.) And what about the quarter billion it cost the Australian economy thru that wildcat shutdown? And quite possible much more through damage to Brand Australia over the coming years.

Again, why do you think Singapore keeps a Golden Share in SIA? And with retention of shares after privatization the government can recoup some of its “losses” via dividends. We managed to get the worst of all possible worlds, and to doubly inflict self-harm we privatized our airports into a dangerous monopoly (so Qantas gets hit with the highest landing fees in the world–and its customers with the highest parking and transport fees in the world–at its home base, while Singapore, Emirates etc have their homebase/hub also government owned and controlling this strategically important element to make sure it all works for the nation. (Do you think there might be some reason why the US retains ownership of all their big airports?)

You finish: “Qantas was on a highway to extinction when in government hands, and you can guarantee no government is going back there.”

Funny, because Qantas is clearly on a highway to extinction right now in the hands of the private sector. They would either completely offshore it, hand over a lot of its assets (planes, landing slots) to the trashy low-cost brands it is trying to create (we’ll see how well they compete with the Asians over the medium or long-term), or of course the medium-term plan for the likes of Joyce, Leigh and Dixon: cash out in a sale to PE. Every financial commentator I have read from the failed PE takeover in 2008 says it would have assuredly lead to the complete collapse of the airline. Yet it is clear it remains in the hearts of the board, even if it is against the shareholders interests and assuredly against the national interest.